There was a diverse reaction in the currency markets due to yesterday's PMI data. Germany's and France's values of the indicator were generally higher than expected, but the figures from the Eurozone were not so unclear.

Europe's manufacturing business activity index (PMI) rose to 53.6 points this month, and although it was higher than the forecasted 53.1 points, it was still less than the October value of 54.8 points. On the contrary, the value of the business activity index in the services sector was 41.3, which turned out to be significantly lower than the expected value of 42.5 points and the October value of 46.9 points.

Nevertheless, it is clear why the production indicator rose and the value of the service sector indicator fell. This is due to the partial return of the economic activity of enterprises, but the new restrictions imposed have dealt another blow to the servants' sector.

Contrary to the Eurozone, American values of indicators were certainly positive and grew not only above forecasts, but also above the previous October values. The index of business activity in the manufacturing sector (PMI) for this month rose to 56.7 points against 53.4 points a month earlier. The index of business activity in the service sector also surged from 56.9 points to 57.7, with a forecasted decline of 55.0 points.

After the data were published, the US dollar sharply increased across the entire range of the currency market. The price of gold generally collapsed, declining below the strong support level of 1848.00.

What is the possible reason for such a sharp growth of the dollar rate?

We believe that the sale of US Treasury bonds, which caused a sharp rise in profitability, was the reason for an unexpected rise in the dollar rate across the entire currency market. However, the situation returned under the influence of the continuing positive mood in the financial markets, which is associated with the vaccines for COVID-19.

Assessing the overall situation on the markets, we believe that the general sideways dynamics will continue until this week ends.

Forecast of the day:

The GBP/USD pair is trading above the level of 1.3310 again. If it holds above it, it will gain another growth impulse towards 1.3400.

The USD/CAD pair is trading above the support level of 1.3035. It may further decline to 1.2985, in the wake of continued growth in crude oil prices.